Save World, Construct

Krugman points out that the economic success of the South-West (Houston) and South (Atlanta) is caused by providing decent housing to the middle class: “Wrong Way Nation“.

Well, right, and very important. However, the problem is not restricted to the USA. It struck Japan very hard, 25 years ago: there was no more decent, affordable housing for Japanese workers in the main production centers.

And, yes, indeed. There is a housing crisis throughout most of the Western World, especially much of Europe. Massive construction programs there after World War Two promoted massive economic growth. A French saying goes:”Quand la construction va, tout va.” (When construction is OK, everything is OK.)

Instead of building increasingly better, denser cities, what happened in the last 40 years was an attitude of NIMBY (Not In My Back Yard). For example San Francisco built no skyscrapers for 30 years on the ground that they may throw shadows, sometimes (a curious idea in a city characterized by thick fog), or, horror of horrors, that San Francisco would turn into Manhattan.

The practical result has been that, not only quality of life of the middle class has gone down from Paris to San Francisco, but economies have stagnated, while lethal pollution has not been fixed (locally, or globally).

The middle class (let alone the lower class) has been increasingly unable to afford decent housing… in the most important cities. Instead an increasingly inefficient lifestyle of long range commuting ruled.

However, thanks to a new born common sense, young people are increasingly refusing the suburban, multi-car, long commute way of life, thus fleeing to live in ridiculous places such as Silicon Valley, characterized by having an affair with one’s car. Under pressure, San Francisco, I am happy to report, is Manhattanizing; youth devising new apps, prefer the City to unaffordable mansions in the woods, far from any trace of civilization.

Some of the new towers in San Francisco will provide the upper middle class with decent housing (instead of sky high rents in small, dank, mold ridden rabbit cages).

This, massive construction, is a solution for the entirely stagnating Western World: build more ecological, denser, high tech cities. Not only the economy will blossom, and society become more just, equalitarian and decent, but the biosphere outside of these more efficient centers of humanity, will be given an opportunity to recover.

Modern buildings can be not just energy efficient, but energy, and even food, producing. Especially tall skyscrapers. And to commute between city centers, 250 miles per hour electric trains are already a reality. London city center is just two hours from Paris city center, by the existing train, the Eurostar.

Off with anti-city mentality. Remember that civilization has to do with cities. Grow them right. To work!

Indeed, humanity cannot afford the luxury of mansion living… Although I’m sure it’s nice.
BTW, at least 400,000 French call London home, and love it. They feel it’s a conglomerate of cities… Rather than a huge one like Paris

Er, Alphonse Allais was a humorist.
The other well known proposal in his programme (his literary creation, Captain Cap, was entered in the electoral race for Mayor of Paris) was to extend Paris’ Boulevard St-Michel (Boul’Mich, the ‘in’ place at the time) to the seashore.

I live in the countryside myself, but my workstation is my home office.

Coffee is a beverage that puts one to sleep when not drank.
Alphonse Allais

Indeed, nowadays, many of the advantages of cities have disappeared, thanks to modern telecommunications. I really do not see why people would want to live there, except when very young, old, sick, or thick…

The pressure to build is intense, especially here in my town of Colchester. I looked at the map of my town 200 years ago, and most of the town was inside its Roman walls, it is astonishing how much it has grown to swallow up villages in its relentless house building. At least I can within 15 minute cycle ride still hit countryside, and we have few high rise buildings.

Until a sense of localism away from central control happens where a community can control its own boundaries (Colchester called non-residents foreigners in the middle ages) nothing positive will happen about the hellish nightmare called cities.

Still more and more people flock to cities
Most folks are urbanites. There are some great cities. The New York Times just called New York and London “city states”. So some think localism is growing. Fact New York is hellish

Patrice, what is going on in France? Why is Hollande pivoting towards more austerity? How committed are the French general population for the Euro project? Why are its officials seemed hostaged by the right wing austerity madness?

And your new economic minister is a former lieutenant of the Rothschild banking empire? What the f…

Dear Lovell: Thanks for asking the question. Indeed, what the f… Indeed Emmanuel Macron, 36 years old, the new economic minister, was employed by the Rothschild bank for four years.

Macron is a graduate of ENA (Ecole Nationale d’Administration) pushed his schooling up to a DEA in philosophy (a sort of super master, now called a master II, it seems). Naturally he became a “inspecteurs des finances”. As banks’best friends after central bankers, are finance inspectors, he naturally ended at Rothschild. Notice that Rothschild, with friends like that, bank escaped all and any problems since 2008.

Of course, Macron became instantaneously extremely wealthy at Rothschild, and that no doubt would persuade any body of his moral fiber of the righteousness of so called high finance.

Maybe I should make an essay on this. Let me see if I find the time.
PA

Montebourg would make a better president than Hollande, no doubt about that.
However, let’s not forget that they all get bought big time by the financial plutocracy.
Montebourg could not tell, and so did not tell the real story of GE taking over Alstom.

The real story? Obama made a 60 billion dollar gift to GE. The French gov did not do the same with Alstom.
But then there is what we see, and what we can guess. Now that Alstom is more or less GE, maybe Alstom can sell Very High Speed trains in the USA? Also most people do not know the frequent type of jet engine in the world are GE-Safran concoctions. Safran ( a recent name) is actually made of very old and famous French aircraft engine companies.

The way I look at it, the real problem is not companies making good products (GE, Safran, Alstom, etc.) but those making very bad corruption (Loockeed Martin, etc.)
PA

Dear Patrice, it is long time i am fostering your idea of need to change the paradigm of American style of life, which unfortunately became the golden standard of good life all over the world. If to characterize the American style of life in one sentence, it would be “consume more than you can afford to pay for and immediately, now”. To this life style belongs the suburb cottage and the daily two hours each direction ride on a big car, driven by sole rider rushing to his work and from it. The other phenomena of American style of life is that more value is invested in the wrap of the product than in its content. Significant part of the product value is advertisement, which in its essence is forced by very aggressive means on the people, and intends to spread disinformation in many different forms. If in the “economic prehistory” adds used to bring relevant information to the potential consumer, not any more. They had evolved and became more and more sophisticated and tricky. As side effect of this trend, is that there are more students in the universities in different economic and administration studies than in all the other sciences together, and many of them are studying “Marketing”. (Maybe because of no need for sophisticated mathematics).
This American style of life is very appealing to certain kind of people whose main intellectual, spiritual and cultural occupation is SHOPING!!!. And these are the vast majority of the people in the US, but unfortunately also in other parts of the world. All this could left us indifferent, if not the new phenomena of unprecedented long-term high economic growth in the two most populated countries in the world, India and China, where live 40% of the world population. Suddenly the Chinese also discovered that they want to ride to work on their private car, and let it be as big as it just can be. Since last year the Chinese car market preceded the US car market, and it is only at the beginning. Already now there are more than 1 billion cars running the roads of the world. Can you imagine that this number will be 3 times more? All the green forest will become black roads. And let’s not forget, people that ride in their private cars to work, they also live in the suburb cottages in the so called “Nature”.
And back to the paradigm change you are speaking about. I hope it is not only a wishful thinking that the American youth is in process of changing taste preferences from branded and “over-marketed” products to something more valuable to my humble opinion, real Culture, Spirituality and Intellect.

Ultimately the cultural does not just emanate from tradition, but also from the neurology that the tradition gives rise to. Lack of sleep, in particular, leads to lack of psychological, logical and mental depth.
Americans do sleep very significantly less than Europeans.
PA

Excellent Krugman piece today (The Fall of France), to which you responded (and were published btw). Interesting is how this piece, which fits neatly and brilliantly in the economic debate now being – at loooong last – brought up in the open in France, is completely ignored by the French media. I’m no conspirationist but I do believe in knee-jerk, uncoordinated plutocratic cronyism.

Yes, Krugman’s essay was indeed totally excellent. And indeed the way the debate is done in France is grotesque. I passed by there like a hurricane in the last few weeks, sowing discord in the mountains, basically accusing the opposition to some proposed dams to be not aggressive enough. Also I protested against some new and outrageous usage of the wilderness in national parks.
I was dismayed to find the French as spirited as long boiled vegetable.

Anyway, I have to get an essay on this, extending my comment. What did you think of it?
PA

Your comment on PK’s piece highlighted an issue he thoughtfully let aside – the extent to which European and American absurd policies are explained not by stupidity at the top, but by the incestuous orgy between Government and so-called investment banking (which does anything but investing).

I know you contend he is a willing participant in the orgy, but it may be he is wary of being shot down as a bolshie and thus having his overall contributions discarded by the herd. Already some of the comments on his column show how obdurate Tea Party-GOP “economists” can be (much like our French home-grown breed).

I do agree that’s a problem Krugman has. I do believe he loves the orgy, while being perhaps even more ready to bash it, and yet being held back by the fact he would then be assimilated to Lenin (who he is certainly no more than me).

It’s a problem I myself encounter. More on that in my next essay, coming in minutes. As I related in the past, I had a major USA architect screaming in my face, because I dared to suggest changing the USA Constitution (an activity decent countries have to practice, lest they become indecent). It’s astounding how upset common people get when they are mentally involved in something, and one comes to criticize that a bit.

So Krugman is doing well at this point. Although I criticize him a tini tiny bit in the next essay, it’s extremely mild relative to the broadsides I had to fire in the past.

He obviously let me (and now a cohort of parrots) say what he would like to say, but can’t. Complementarity.
PA

Wow! I am becoming popular! ;-)! Some balm for my bruised heart from so many censored comments of mine! I just fought on the phone with some French lady who told me I was too tough on Macron, a “homme simple, qui vit simplement”… And just masterfully conducted an astounding transaction which made his fortune…
PA

True I was published, but my comments on Putin recently were totally censored: I am apparently too anti-Putin (although my comments are cogent).

Krugman is, at this point, by far the one who publishes me the most at the New York Times. That’s an improvement I appreciate. All the more as he is the most interesting, if not the only interesting voice at the New York Times.

Others have weird agendas. Or pretty transparent ones, like my old enemy Friedman: censor and steal, an old stand-by of the peer review system in academia… Amusingly, and naturally, the professional “philosophers” at the New York Times censor the most… They have the best training.

Every economic policy tries to cope with three major economic problems, stability of prices, economic growth which is needed if the policy is to achieve full employment due to continuous increase of efficiency in the economy and the last “Fair” distribution of income and wealth. But who will tell “What is Fair???”. To those, with less skill to generate wealth, who are on the lower level of the economic income, fair is more even distribution of income. On the other side, those skilled, who are also more sophisticated to cover their real intentions, see just fair, that they are rewarded much more than the lower classes.

Public deficit, sometimes wrongly called budget or government deficit, includes government deficit but also deficit of not governmental institutions, whose source of income is certain kind of non-governmental taxes. Such institutions are for example the national social security institution, with high propensity to deficit mainly in pension insurance and medical insurance, due to increase in the life expectancy. These institutions even if legally independent are managed by politicians, who naturally are not to interested in insurance risks calculations of some actuaries. Other institutions are the local or municipal institutions, who have the right to collect taxes too, and have tendencies to create deficits. Why so? Because it is generally believed, that the government at the end of the day will not let them down, and will cover their deficits. The reason for this believe is a subject to a whole essay if not a whole book.
But then how can the government cover these deficits? Of course by printing money. If government needs money, first it takes loan from the central bank, then the central bank issues securities against this government loans, and sells these securities on the market. If too much securities are issued, their price tends to decrease and with it the interest rate increases. This is not very good for investments and subsequently for economic growth. No economic growth, no profits, no profits no taxes, and subsequently the deficit growths even more. So this kind of spiral can’t go forever.

Alternatively the government can intervene in the market, to purchase its own securities at high price and not to increase the interest rate, or even decrease it as it happened under the policy of quantitative easing. But then will it not decrease the value of money? The deficit itself means more money printed and more abundance of money. It is well known everything abundant has less value than something scarce. Take diamond jewelry against glass one. To me they both look just the same, except of their price. This price decrease of money can come in form of inflation, but also in form of new taxation, or long term process that degenerates the value of the savings connected to money relatively too other forms of holdings.

But printing of money doesn’t necessarily mean more money circulating in the economy. The government and central bank have many instruments how to decrease the money in circulation. Just to remain you, most of the money in circulation is created by the commercial banks and not by the central bank. Policy change of central bank towards the commercial banks can have bigger effect on liquidity than new money printed due to public deficit. The very best example is the Basel III accord, that unfortunately for the banks is about equity credit ratio. This ratio can be improved only by increasing equity or decreasing credit. But increased equity can come either from profits or from new investors. But how can the banks increase profits if they must reduce their borrowings? And as to the new investors, who wants to invest in a risky business with reducing profitability? The result is the credit squeeze of the banks exceeds the central banks capacity to print money.

As to the distribution of the wealth and income, the deficit is not neutral. Most of the public spending, (except of military) goes to the lower level of the society. But also the biggest purchasers of these securities are those who have money and “hate risk”. The pension funds are the biggest among them, where are deposited most of the savings of middle and lower income segment of the population.

Conclusion; If the value of the money goes down, so does the value of the assets connected to the money. Public deficit is good for those who enjoy most of the public money, and not so good for those who live on wealth accumulated in the past. This are mostly rentiers, and pensioners.